Mongolia rations gasoline as fuel shortages send drivers into long lines

In a city where getting stuck in traffic can already turn a short drive into a test of patience, Mongolians are facing a new question before they even start their engines: Will there be gasoline when they get to the pump?

Long lines have formed at gas stations across Ulaanbaatar as a nationwide fuel shortage forces the government to ration gasoline and scramble for new supplies.

Since early August, vehicles have been allowed to buy gasoline only on alternating days based on their licence plate numbers. Purchases initially were limited to 50,000 Mongolian tughrik (just short of $14), or about 14 litres (3.7 gallons), and authorities banned drivers from filling external fuel containers at gas stations.

The US Embassy in Ulaanbaatar said on August 7 that it was aware of long lines at fuel stations and that many stations were waiting for additional deliveries. The embassy said the shortages were nationwide and advised US citizens to delay nonessential travel, limit long-distance trips and consider moving up planned departures from Mongolia.

For tour operators who take visitors deep into Mongolia's countryside, the shortages have added another logistical hurdle to already lengthy journeys.

"It is terrible," said Suren Bat-Tur, a local tour operator who runs jeep trips for backpackers. He said some drivers had spent the night at gasoline stations only to receive a limited amount of fuel.

Bat-Tur said his four vehicles were in the countryside with tourists and that the drivers were having difficulty finding gasoline. Bat-Tur told his drivers that the amount of gasoline they could buy was less important than maintaining the quality of their tours. 

The price of gasoline has also risen. Bat-Tur said AI-92 gasoline, Mongolia's most widely used grade, was selling for about 2,850 tughrik per litre on August 9, up from about 2,550 tugriks 20 days earlier and 2,350 tugriks two months ago.

By August 10, Bat-Tur said, gasoline stations had begun allowing tourist vehicles to fill up without the previous purchase limit.

The restrictions reflect the growing pressure on a country that relies heavily on imported petroleum products to keep its cars, trucks and mining industry running.

Industry and Mineral Resources Minister Damdinnyam Gongor has portrayed the shortages as part of a broader global energy crisis, citing disruptions stemming from the Russia-Ukraine war and the conflict between the United States and Iran.

Mongolia continues to receive gasoline from Russia, by far its main fuel supplier. According to the state-run Montsame news agency, more than 10,000 tonnes of AI-92 gasoline entered Mongolia through the Sukhbaatar border crossing between August 1 and August 5, with additional shipments on the way.

But the government has been seeking additional suppliers as prices rise and geopolitical disruptions put pressure on fuel markets.

In a July 31 Facebook post, Damdinnyam said Mongolian fuel importers had begun negotiations with South Korea's GS Caltex over fuel quotas, prices and transportation, with an agreement to receive the first products by the end of August.

Prime Minister Uchral Nyam-Osor also met, on August 7, with the head of PetroChina Dachin Tamsag, a subsidiary of China's state-owned China National Petroleum Corp. 

PetroChina Dachin Tamsag agreed to supply 6,000 tonnes of AI-92 gasoline to Mongolia this month. Uchral asked the company to increase and stabilise supplies to 12,000 to 15,000 tonnes a month and seek ways to reduce prices.

On August 7, Damdinnyam said he was heading to Moscow for what he described as his ninth trip in the past year in his capacity as minister to negotiate fuel supplies. He also said he would travel to Kazakhstan and Beijing after his Moscow visit to discuss fuel supplies.

Bat-Tur said the fuel crisis was drawing mixed reactions from Mongolians.

"Some people are angry with the government and some people understand why this is happening," he said.

The government is also trying to build larger fuel reserves to cushion the country against future shortages.

Eighteen companies have begun building or expanding 22 petroleum storage facilities with the help of government-backed loans, officials said. One facility under construction in Ulaanbaatar is expected to add enough capacity to cover about 13 days of the city's AI-92 consumption when it opens later this month.

Another storage project in Ulaanbaatar, planned to be Mongolia's largest, is expected to add another eight to nine days of national fuel consumption when completed in 2027.

The government says the projects eventually will give Mongolia enough storage capacity to hold up to three months of national fuel consumption.

The government is also seeking to reduce its dependence on imported fuel over the longer term.

Prime Minister Uchral was in Dornogovi province on August 10 touring the oil refinery under construction there, as officials pushed to get the long-delayed project operating by 2028.

The government said construction of a 527-kilometre (327-mile) oil pipeline linking the refinery, the country’s first. to an oil field in eastern Mongolia is more than 90% complete. The pipeline will be Mongolia's first long-distance oil pipeline and is intended to ensure a steady supply of crude to the refinery.

Uchral said construction had been stalled for about two years because of financing and legal problems but that those issues had been resolved. About 4,500 engineers and technicians are now working on the project around the clock, the government said.

The $1.7bn refinery is designed to process 1.5mn tonnes of crude oil annually. Once operational, it is expected to produce enough fuel to meet about 55% of Mongolia's domestic oil needs.

But the long-term strategy offers little relief for motorists waiting in line at gas stations. 

For Bat-Tur, the shortage is not simply a matter of finding enough fuel to keep his vehicles moving. It is about making sure the tourists he takes into the countryside can still have the experience they came for.  

“It is important to keep the tour quality,” he said.